What happens if a Bath Tune Up franchisee fails to furnish documents as required?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, if such audit or inspection is made necessary by the failure of Franchisee to furnish Documents as herein required, or if it is determined by any such audit or inspection that Franchisee's records and procedures were insufficient to permit a proper determination of Gross Revenue or Product purchases for any year or part thereof to be made, or that Gross Revenue, Continuing Royalty or other material financial information for the period in question were understated by 5% or more of the Gross Revenue actually received, Franchisee shall immediately take such steps as may be necessary to remedy such default in accordance with any Franchisor requirement and Franchisee shall promptly pay to Franchisor all costs incurred in connection with such audit or inspection, including, without limitation, charges of an accountant and the travel expenses, room, board and compensation of employees of Franchisor or its designee who performed the audit or inspection.
In the event any audit or inspection reveals any understatement of 5% or more of Gross Revenue, Franchisor has the right as it deems necessary to conduct further audits or inspections for up to two years thereafter, at Franchisee's expense for all costs and expenses of the subsequent audit or inspection.
Franchisee acknowledges and agrees that if a subsequent audit or inspection reveals any understatement of Gross Revenues of 5% or more, in addition to any other available remedies, Franchisor will have the right to terminate this Agreement without any opportunity to cure in accordance with Section 10.2 of this Agreement.
If Franchisee's records and procedures were insufficient to permit a proper determination of Gross Revenue or Product purchases, Franchisor shall have the right to deliver to Franchisee an estimate, made by Franchisor, of Gross Sales or Product purchases from other than approved vendors for the period under consideration and Franchisee shall immediately pay to Franchisor any amount shown thereby to be owing on account of the Continuing Royalty and other sums due on account of any understatement and, as liquidated damages and not a penalty, such sums that would otherwise have been paid to Franchisor by approved vendors in the form of rebate had Franchisee purchased Product from the approved vendors instead of unapproved vendors.
Any such estimate shall be final and binding on
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, if a franchisee fails to furnish required documents, Bath Tune Up has the right to conduct an audit or inspection. If this audit or inspection is necessitated by the franchisee's failure to provide the required documents, the franchisee is responsible for covering all associated costs. These costs include charges from an accountant, as well as travel expenses, room, board, and compensation for Bath Tune Up employees or designees involved in the audit or inspection.
Furthermore, if the audit or inspection reveals that the franchisee's records and procedures were inadequate for accurately determining Gross Revenue or Product purchases, or if Gross Revenue, Continuing Royalty, or other significant financial information was understated by 5% or more, the franchisee must take immediate corrective actions as required by Bath Tune Up. The franchisee is also obligated to promptly pay all costs related to the audit or inspection.
In cases where the audit or inspection uncovers an understatement of 5% or more in Gross Revenue, Bath Tune Up retains the right to conduct additional audits or inspections for up to two years thereafter, with the franchisee bearing all costs and expenses for these subsequent audits. Additionally, if a subsequent audit or inspection reveals another understatement of Gross Revenues of 5% or more, Bath Tune Up has the right to terminate the franchise agreement without providing an opportunity to cure the breach.
If the franchisee's records are insufficient for determining Gross Revenue or Product purchases, Bath Tune Up can provide an estimate of Gross Sales or Product purchases from unapproved vendors. The franchisee must then immediately pay any amount owed on account of Continuing Royalty and other sums due to the understatement, as well as liquidated damages. This estimate will be considered final and binding on the franchisee.